How Can I Reduce or Eliminate My Credit Card Debt?

Credit card debt can be a drag on your wallet and your well-being.

Owing thousands of dollars on a credit card can heighten your stress level. What's more, a large debt load makes it harder for you to obtain good rates on different types of financing. Even if you pay your bill on time each month, it can take years to erase or eliminate your credit card debt. Getting out of debt calls for a realistic plan, willingness to sacrifice, and the self-control to stick with it.

Instructions

1. Face your debt. Getting out of debt or significantly reducing your credit card balances requires knowing how much you owe. Get your statements and calculate your balances.

2. Sort your debts by interest rate. Aim to pay down your highest-interest-rate credit cards first.

3. Contact your creditors. Speak with your creditors to see if you're eligible for an interest rate reduction. This requires a good payment history and good credit, but even if you don't have these, try anyway. Be persistent, be honest, but don't be rude.

4. Transfer balances. Consider moving your high-interest debt to a low-rate credit card by means of a balance transfer. If you do this, don't spend money on your high-rate card. Instead, cut it to pieces.

5. Avoid paying the minimum. Paying the minimum each month will not reduce your debt fast. Put all your disposable income toward your debt to reduce the balance.

6. Cut back. Maintain restraint and avoid whimsical or impulsive spending. Learn how to do your own hair and nails, or consider brewing your coffee at home or brown-bagging your lunch to save money and pay off debt.

7. Explore ways to bring in additional money. Search the classified ads for a part-time job, start a home business, or ask to work overtime to generate extra money to get out of debt.

8. Utilize your home's equity. Consolidate your debts and pay off credit cards with a home equity loan or mortgage refinance. Contact your mortgage lender for additional information and to discuss loan requirements.

References

• Fool.com: 60 Second Guide to Getting Out of Debt
• Creditcards.com: 5 Steps to Eliminating Debt
• Oprah.com: Debt Relief